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Will filing for bankruptcy help save my home?

Many Florida residents are still struggling to save their home from foreclosure, and one option that some are considering is filing for bankruptcy. Filing for bankruptcy may save someone's home from being repossessed by a bank, but there is more to it than just filing. To begin with, people need to determine if a Chapter 7 or Chapter 13 bankruptcy will be better for their situation. If someone does not plan carefully, filing for bankruptcy could end up only delaying a foreclosure.

Chapter 13 is usually the preferred bankruptcy filing when someone is attempting to avoid having a lender take their home. This is because it gives people additional time to pay back their debts - usually between three and five years. Having extra time to catch up on a mortgage can give people the breathing room that they need to do so. However, if someone does not have the income to keep up with both their current and back payments, they could run into trouble.

If someone's income is not sufficient, they may want to look at filing for Chapter 7 bankruptcy instead. When someone has large amounts of credit card debt, much of their income may be taken up with monthly credit card payments. Filing for Chapter 7 discharges this debt and can free up enough money so people can catch up with their mortgage payments.

While bankruptcy can help save someone's home, there is no one-size-fits-all approach. A lawyer may be able to help someone who is concerned about foreclosure to understand which bankruptcy filing would be most helpful to them. Additionally, a lawyer may explain what is involved in each type of filing and the differences between them.

Source: FOX Business, "Will Bankruptcy Help Mortgage Modification?", Justin Harelik, June 11, 2013

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